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    Wednesday, May 22, 2024

    Conn. business would get tax credit for paying employees' student loans under new bill

    Hartford — A new proposal would encourage small businesses to help pay their employees' student loans by offering a tax credit.

    It's gained support among students, as well as officials.

    "As a first gen college student, I want to be able to get through college with little to no debt to be able to start my life strong out of college and not have the burden of student loans weighing me down," Jackson Robert, a Ledyard High School sophomore wrote in a public testimony letter.

    Robert is advocating to decrease the price of college as part of a civics action project at school with hopes that lower-income homes can send their children to college without the burden of potential debt.

    He was one of the people who wrote in support of the new bill that aims to alleviate student loan debt by offering tax credits to small businesses that help pay their employees' student loans. The bill was referred to the Legislative Commissioner's office on Wednesday and is awaiting being sent to the floor to vote.

    If passed as-is, small businesses that make less than $5 million a year could claim a tax credit for half of the amount that they paid to a qualified loan servicer on behalf of their employee. The bill also caps the amount of tax credits at $10 million and will be in the order received.

    About 542,300 Connecticut residents held student loans in 2021, according to data from the Federal Reserve Bank of New York. On average, they owed $36,300 dollars, up from the 2016 average of $29,700.

    The proposed legislation builds upon the existing Connecticut Employer Student Loan Repayment Program established by a 2019 law. By expanding the program to cover employees with any type of student loan, Gov. Ned Lamont aims to increase the number of eligible loan holders, enabling more employers to participate in the tax credit program.

    He called the legislation a "win-win" and said that this expansion will not only reduce tax liabilities for businesses but also improve the economy. He said that student debt reduces disposable income and impedes residents' ability to pursue other life goals, such as homeownership, retirement savings, or starting a family.

    "This change will increase the number of eligible loan holders allowing more employers to take advantage of the tax credit program. Not only does this program reduce a business' tax liability, but it will also act as a recruitment tool," he said in a statement.

    Support for the bill extends beyond the governor's office, with key stakeholders such as the Office of Workforce Strategy, the Office of Higher Education, and the Connecticut Health and Educational Facilities Authority expressing their support. However, the CT Community Nonprofit Alliance also raised a concern about the potential impact of the bill on tax-exempt nonprofit organizations.

    The bill could also establish a program to subsidize interest rates on loans taken out by individuals employed in high-demand fields from the Connecticut Higher Education Supplemental Loan Authority. This initiative seeks to help keep workers and provide financial support to both employers and employees.

    Jeanette Weldon, the executive director of the Connecticut Health and Educational Facilities Authority, wrote in support of the bill — particularly the new program.

    "This program will create a single mechanism that can be used to provide an invaluable recruitment and retention tool, while addressing workforce shortage areas for various professions," she said in her testimony.

    Comment threads are monitored for 48 hours after publication and then closed.